There are three things which every individual must see before investing:
1. Return: It should always be more than an inflation rate; otherwise, there is no use of investment.
2. Risk: It depends upon person to person, as higher the risk higher the return and vice versa.
3. Time: Return always depends upon the time for more time you invest more profit you get and vice versa.
Return, Risk, And Time Are Directly Proportional To Each Other
We generally save some amount of our income in the following areas Saving account, Fixed Deposit(FD), Recurring Deposit(RD), Gold, Real Estate, Stock market, Mutual Funds. Let’s find out the best option among these
1. Saving Account🏦
The most preferred choice of investment where we get fixed returns with a specific time and no risk. Investing in this option is equals to no investment at all, as the performance we get in this option is almost equal to the inflation rate.
2. Fixed deposit
This option is suitable for those who don’t want to take a risk and want specified returns with a specific time.
3. Recurring deposit
Monthly saving with no risk and less performance is suitable for those who wish to interest more than saving accounts.
You can see in this chart as it is good to invest in Gold between 2001 to 2012 where you can get good returns, but nowadays, return in gold is limited to some extent.it is suitable for those who want volatile returns with moderate risk.
5. Real Estate🏰
It requires colossal capital where the returns are volatile, and investment is risky too.
6. Stock market
It depends upon the stock you are buying. Though it is dangerous, returns in this are good also, so if you know the stock market, you can invest here where you can get an excellent performance.
Before proceeding towards our last option in my advice, a person should not invest in one particular area. He/she should invest in different areas, which is known as DIVERSIFICATION. So, do we have time to invest in all the regions,for many of us the answer is No? So, how great it is if we have someone /something who can make this diversified investment. Mutual funds do the same thing for us.
7. Mutual funds
It invests in different areas such as equity, debts, gold, real estate etc.so mutual funds do the diversified investment. It involves risk but can get good return i.e., minimum you can get 3% and a maximum 35% or more than this.